Dealing with a closed checking account — March 2012, reviewed January 2013

Have you bounced yourself out of a checking account? Consumers who frequently write bad checks may find that their bank or credit union decides to close their account. This means it will be difficult to open another account at another financial institution.

Financial institutions track negative information related to how consumers use their account. This is done through a consumer reporting service. Under the Fair Credit Reporting Act, a bounced check may stay on your record for as many as seven years. Being on a check reporting systems’ list means you may have a hard time opening a checking account.

What steps can you take to fix a problem? First, order a free copy of a report on you, if there is one. (www.consumerdebit.com/consumerinfo/us/en/chexsystems/report/index.htm) You then need to review the report and dispute any incorrect information. Beware of companies that promise they will clean up your record for a fee. There is no quick fix for negative information that’s legitimately reported to a consumer reporting service.

Don’t give up on obtaining a traditional checking account. There are banks and credit unions that are willing to open checking accounts for people who have a negative past. These are often called ‘second chance’ checking accounts. But be sure to review the terms of the account including any fees that need to be paid and any conditions that need to be met for the account.
If you do get a new account, work hard to use the new account responsibly. That means closely monitoring the money going in and out of the account, including deposits, fees, debit card transactions, automatic payments and other withdrawals.